The more diversified the portfolio, the greater the footprint and the more diverse our client base is, the better.


A diversified portfolio in Oman

August 31, 2023

Sadiq Sulaiman, CEO of Arabian Industries, talks to The Energy Year about the demand for EPC services in Oman and the company’s activities in oil and gas. Arabian Industries provides manufacturing, EPC, maintenance, turnarounds, logistics, rig moving and support services to the oil and gas sector and other industries.

What is your assessment of the demand for EPC services in the country and its relationship to oil prices?
The pandemic and the oil price slump affected the country, making everybody concerned from an economic perspective. However, since the end of 2021, we have been able to see that momentum is picking up. The oil and gas industry started to respond with a positive outlook which was a relief for service providers like us.
It will take a while before things get back to normal because usually a project needs between 18 and 30 months to be realised, from scratch to commissioning. Nonetheless, as of now, oil prices are back to USD 80-85 per barrel, which is far above the State’s 2022 general budget estimate of USD 50 per barrel of crude. Given our involvement in several oil and gas projects, this is a very good sign for us.

Can you walk us through Arabian Industries’ track record in oil and gas and the main activities it has conducted within the field?
The oil and gas industry represents an important segment for Arabian Industries. We worked on the construction of PDO’s Yibal Khuff mega-project, taking care of the off-plot deliveries. We were also a part of OQ’s refinery projects in Sohar and Duqm, where we delivered several critical pressure vessels and process columns. Then we have been directly running the comprehensive maintenance of the Oman LNG plant since it was commissioned.
Furthermore, we have an ongoing contract with PDO, which relies on Arabian Industries for any modifications and improvements to its facilities in Block 6, which is responsible for the majority of the country’s oil production.
Our philosophy, as far as construction in oil and gas is concerned, is that the more diversified the portfolio, the greater the footprint and the more diverse our client base is, the better. That is why we have already tendered for the upcoming projects in blocks 10 and 11, and we have also been involved in several EOR-related projects for steam injection, where we have worked with GlassPoint Solar.
Finally, we have long-term contracts with OQ in blocks 60 and 48 and with Oxy for Mukhaizna field in Block 53. We are one of the oldest field development contractors for Oxy as we served their Oman North concessions for over 38 years.

In light of the rising popularity of the design-build-own-operate-maintain (DBOOM) approach, what is Arabian Industries’ business model?
At the moment, our main focus is within construction, maintenance and partly procurement, while we subcontract the engineering side of EPC, partnering with companies that can cover that segment. For the time being, we are not looking into taking up full-fledged DBOOM-type projects on our own.
To tackle the engineering design aspects, you need a different set of skills, organisation and workforce, as you need fewer blue-collar workers and more white-collar ones, and our workforce is around 80% blue collar. To deal with the “E,” you also have to present experience in project management and cover the whole spectrum of the subject with trained engineers. We have very capable ones, but they focus more specifically on construction issues, such as field engineering and construability reviews.


What is the role of local companies – and of Arabian Industries in particular – in the In-Country Value (ICV) initiative as it concerns the EPC sector?
Local Community Contractors started off with supply of manpower – thanks to the support and training provided by companies such as PDO and OQ – they are now delivering packages on their own and partnering with large companies on important projects. We definitely see the authorities pushing for the development of strong local content as a way to keep money circulating within the country and as a way to generate more employment and revenue streams. The Ministry of Energy and Minerals in particular wants to “Omanise” the turnaround maintenance segment of oil and gas (e.g., shutdowns).
In this regard, Arabian Industries – through its subsidiary TOCO [The Oman Construction Company] – plays an important role, as shown by the safe and successful completion of PDO’s 2022 Amal shutdown. The shutdown was performed by a 100%-Omani team through the recently awarded OPAL turnaround (TAR) contract.

Can you give us some further details about the company’s turnaround operations?
The shutdown turnarounds mean that, once a year, clients such as OQ, PDO and Oxy require between 500 and 2,000 skilled workers to deliver either maintenance or shutdowns of facilities. These activities were traditionally carried out by expats. The government’s plan was to develop a domestic workforce to deliver these services. They selected us as the single contractor to provide them for all the major operators across the country throughout the whole year.
Currently, we are building up this cluster of skilled Omani by selecting people and conducting training. We believe the real essence of ICV is helping locals acquire skills and contributing to the country’s sustainability by helping it rely on its own resources and human capital.
It is a journey, but we are moving forward: our Omanisation rate is around 40%, but we are planning to increase it further, although we’re aware that ICV is passing from being a “numbers game” to a “productivity matter,” meaning it’s more than how many Omanis you employ but is also about how capable they are.
Performance has to be the key driver behind ICV because from that will come better competitiveness. Today our clients are looking much more into costs, and you cannot afford to not have high-skilled workers because not having them will lead to projects taking longer and thus becoming more expensive.

What competitive advantages did Arabian Industries get from the acquisition of TOCO?
Arabian Industries acquired The Oman Construction Company, widely known as TOCO, in 2021. The operation represents an advantage for us because we brought in some unique skills that have always characterised TOCO’s activities. These skills pertain to downstream and midstream maintenance and the mentioned shutdowns and turnarounds. Moreover, we added some capabilities that were not part of our business portfolio, such as rig moving and specialised logistics for the oil industry.
The acquisition helped us expand our operational footprint to the extent that now we are much more aggressive in rig moving, for example, for which we are already tendering.
In short, we have improved our capabilities, and now we can provide much wider coverage to operators. Thus, we’re presenting ourselves as more of a “one-stop-shop” solutions provider.

What is your opinion regarding the manufacturing and sustainability drives in the country, and how do you see them impacting your activities going forward?
Arabian Industries is a group composed of four main companies: AI Projects, AI Manufacturing, TOCO and AI Technical Support.
With regards to the manufacturing segment, we fabricate process equipment, modules, skids, heat exchangers, vessels and manifolds for the oil and gas industry, but we have also been providing a lot of equipment to water plants.
I see a bright future ahead for made-in-Oman products. The country is moving towards significant economic diversification. Oil and gas will still be important, but it will be complemented by alternative energy such as green hydrogen, solar and wind, all of which will require significant manufacturing capabilities, from photovoltaic modules to desalination and water treatment tools. The energy sector in Oman, generally speaking, will grow, and we are gearing up to be more competitive, with manufacturing as a top segment for us.
In the context of the energy transition, another major aspect for us is sustainability. Arabian Industries is a manufacturing and construction company, and we are working to apply our expertise to provide more environmentally friendly solutions and transfer our know-how in hydrocarbons to other energy segments too. For example, we have been working with two major operators on how to reduce gas flaring using new technologies, and we are assessing opportunities linked to hydrogen.

What is the company’s current footprint in Oman and abroad?
We have been actively tendering in Oman, and lately we have been receiving many orders from outside as well, particularly from Africa. Our manufacturing division export their products across the world.
Furthermore, at the moment we have small-scale operations in Iraq, and we’re conducting larger ones in the UAE, where we are working with ADNOC. We have a subsidiary in Qatar and a partnership arrangement in Kuwait. These two countries are where we are more advanced in terms of market assessments and tendering processes.
Since the end of 2021, we have been constantly monitoring what is happening in the region because we see encouraging opportunities on the horizon, but at the same time, we want to be cautious, and thus, we are proceeding with a market-research-based approach.

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